What are Stock Baskets? Why you should consider them?

Anne E. Evans
Blanket Baskets in a Nutshell – Good Blankets Guide

A stock basket refers to a collection of stocks with a common theme. Stock Baskets include some well-researched, high-quality, and carefully selected stocks by experts that you can invest in with a single click, instead of placing multiple orders.

The unique aspect about these baskets are that these can be tailor-made. For instance, if you are interested in the FAANG {Facebook, Apple, Amazon, Netflix, Google) group and are unable to find a mutual fund or ETF that creates this specific combination for you, you can create a Stock Basket instead. 

Why should you consider Stock Baskets?

Stock Baskets are a good way of allocating your investments across the same sector or multiple sectors. Mentioned below is why you should consider investing in Stocks to create a stock Basket:

  • Invest in your desired theme – As an investor, you get to personally create a Stock Basket based on your preferences. For instance, you can create a basket of stocks from the Nifty 50, that have consistently paid dividends, or a basket of stocks of companies that have zero debt.              
  • Easy to diversify – Baskets make it easy for you as an investor to allocate your investments across multiple securities.
  • Time-saving and convenience – Tracking the performance of a stock basket as a whole helps you save a lot of time when compared to monitoring individual securities. This helps in streamlining the investment process.

Risk associated with Stock Baskets

While there are above-highlighted benefits associated with Stock Baskets, as an investor you must also be aware of the risks involved. A Stock Basket by its very nature can provide concentrated exposure, if you choose the theme basis a single industry, or country, etc. 

For instance, a basket of energy themed stocks to buy today can be severely impacted if there is an adverse news affecting the sector. Or the companies operating in a particular country or region can be impacted due to a political development that is detrimental to the progress in the said region or country.

On the other hand, if the basket is created with performance parameters like dividend or debt position of companies, then the concentration risk is reduced significantly.

Conclusion

The emergence of this concept of investing gives you, as an investor, greater control over where and how much you want to invest. It also brings with itself some risks. Hence, it is best to consult a financial advisor before you curate a stock basket for yourself, so that you get an expert and reliable opinion.

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